The Larger Implications of CP Group’s Investment in Remark Holdings

If CPK paid $12 per share to invest $10m, we know that the management of one of the world’s largest conglomerates believes MARK shares are worth substantially more than $12. CP Group Chairman Soopakij Chearavanont stated, “We see tremendous potential in Remark and its KanKan subsidiary, and we look forward to helping the company grow and scale in the future.” Through the partnership, CP Group will be able to deploy KanKan’s AI and Data Solutions platform across its vast businesses and investments. This extends to strategic business partners such as CITIC Group, a large, state-owned, multinational conglomerate in China; Ping-An Group, a leading provider of personal financial services in China; and ITOCHU Corp, a large Japanese general trading company. CP Group is the leading shareholder in all of them.

This deal should put to rest any suggestion that Kankan is something other than a rapidly growing star among international Artificial Intelligence plays. While Sensetime and other AI players in China have been valued at $3 Billion+, MARK CEO Shing Tao and Kankan have been busy putting deals in place with some of the largest technology (Alibaba, Tencent, Sina), retail / industrial / agricultural (CP Group), energy (ShenHua Energy) and big data (Acxiom) companies in the world. The line up of partners is stunning for a US based start up and the deal announced yesterday in particular seems to give Kankan the early lead as the “go-to” provider of AI technology for China’s largest companies. While we cannot say that Sensetime is not worth $3 billion, we believe that Kankan as a standalone business valued using the metrics from Sensetime’s fundings would equate to Kankan being worth a multiple of Remark Holdings’ current market cap of $247 million. With CP Group taking its stake at an implied market cap of $330 million, we believe there will be many other players seeking to buy a stake in this company in the near future and we believe that MARK shares will trade much higher than that $12 in the near future.